$85M Loan for Hudson Yards Site on Market After Chetrit Defaults
Lender seeks buyer to foreclose, take ownership of coveted development site.
An $85M pre-development loan that Chetrit Group secured for a property on West 37th Street that is part of the Hudson Yards mega-development has been put on the market by the lender, who has declared Chetrit in default.
Chetrit acquired the financial package, which originally included a $54M senior loan and a $31M mezzanine loan, for 545 West 37th Street from JPMorgan Chase and Mack Real Estate Credit Strategies in 2018.
Mack, who subsequently took ownership of both loans, has declared Chetrit in default and is shopping the financial package as “a one-of-kind opportunity [to acquire] a direct and quick path to ownership” of the Hudson Yards property via a UCC foreclosure.
Newmark is marketing the debt for Mack. According to the offering, New York-based Chetrit still owes $85M on the mortgage, which includes a payment guaranty from Chetrit of $18.5M in the event of default.
Chetrit purchased the 545 West 37th Street for $27M in 2012, planning to build a hotel and residential development that never came to fruition. The site is zone for a 375K SF project within the Hudson Yards Special Purpose District, which includes several new Class A office towers as well as a luxury retail mall.
At the end of 2022, Trepp reported that Chetrit defaulted on a $481B loan for a national portfolio of 43 properties encompassing 8,671 apartments that it acquired in 2019 in a transaction financed by JPMorgan Chase.
According to the year-end report by Trepp, the mortgage for the portfolio entered special servicing in Q4 for majority default, an indication that Chetrit had failed to pay its lender the principal balance when the loan came due.
As of March 22, the portfolio had an occupancy of 76%, which hasn’t been high enough to pay the debt service on a floating loan rate pegged to Libor plus 5%, Trepp reported. The floating rate has nearly doubled the interest due on the loan.
Trepp’s report also said Chetrit is delinquent on a $225M mortgage for the Parkhill City apartment complex in Jamaica, Queens.
Chetrit purchased a portfolio of properties in 11 states spanning New York, the Sun Belt, Illinois, Indiana and Ohio from Bloomfield Hills, MI-based Roco Real Estate in a transaction valued at $573M the purchase price is adjusted at a loan-to-value ratio of 84%.
The default on the JPMorgan loan is not the first CMBS loan held on a Chetrit property to go into special servicing.
In 2021, a $177M CMBS loan Chetrit used to finance the acquisition in 2019 of 850 Third Avenue from the Chinese conglomerate HNA Group went into special servicing. Harbor Group International, which held a $25M mezzanine loan on the property, initiated a UCC foreclosure auction.
Chetrit was able to avoid the auction by refinancing the property with a $320M package from HPS Investment Partners.